Predicting individual analyst earnings forecasts

Article Abstract:

A model for predicting the forecasts of corporate earnings per share (EPS) of individual analysts is presented. The model uses the change in other analysts' mean consensus forecast following the date of individual analysts' last forecasts, the deviation of the current forecast of individual analysts from the consensus, and cumulative stock returns since the last forecast of individual analysts. The three variables of the model explain approximately 38% of the variability in the analysts' revisions of forecasts. The explanatory power of the model arises from factors other than the link between changes in prices and earnings expectations. The analysts' subsequent EPS forecasts are derived from an update of their current forecasts for new information, which provides less biased forecasts and more accurate predictions than the current forecasts of analysts.

Models, Forecasting

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Intraindustry information transfers associated with management forecasts of earnings

Article Abstract:

The forecasting of earnings by firms has an effect on the stock prices of the disclosing firms, on nondisclosing firms, and on the stock market itself. Releases of information of this sort actually drives the stock market. Earnings disclosure may be voluntary or involuntary, so it is necessary to know what might occur without disclosure. If 'symmetric belief adjustment' is the motivation for disclosure, nondisclosure by a firm would denote its consensus with prevailing beliefs. Enforced disclosure might result in a cessation of all meaningful information transfer. Free disclosure is likely to occur where firms have little to lose by doing so and a marked ability to change production modes in the event of adverse market reaction. Similarly, enforced disclosure might force weaker firms to take totally different positions.

Methods, Stock-exchange, Stock exchanges, Portfolio management, Investment analysis, Securities analysis

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Earnings management? The shapes of the frequency distribution of earnings metrics are not evidence ipso facto

Article Abstract:

Evidences proving that the shapes (particularly around zero) of the frequency distributions of earnings metrics examined in the extant earnings management literature are affected by several factors, are provided. Conclusions reveal that the shapes cannot be used as ipso facto evidence of earnings management.

Forecasts, trends, outlooks, Market trend/market analysis, Deflation (Finance), Deflation (Economics)

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